Jackson Diocese Reaches Agreement Over Handling of Fraudulent Priest

The Jackson diocese has said Father Vargas was barred from public ministry in November 2018, and by November 2019 it said he had been “stripped of his priestly facilities and authorities in the Catholic Church in Mexico were notified of his standing.”

Diocese of Jackson.
Diocese of Jackson. (photo: Diocese photo. )

JACKSON, Miss. — The Diocese of Jackson has reached an agreement with federal prosecutors to improve its financial controls, in a case related to one of its priests who allegedly defrauded parishioners.

The priest, Fr. Lenin Vargas, has been indicted “on ten counts of wire fraud based on alleged fraudulent fundraising activities,” according to a July 13 statement from the office of the US Attorney for the Northern District of Mississippi.

Fr. Vargas allegedly collected tens of thousands of dollars from parishioners, which he used for personal expenses.

The attorney's office added that it had “entered into a Deferred Prosecution Agreement” with the Jackson diocese “based on the alleged inaction of the Diocese, which allegedly contributed to parishioners continuing to donate money to Fr. Vargas.”

The DPA will be in effect for 12 months, and upon its successful completion, all charges against the diocese will be dismissed. The prosecutor's office reminded the public that a DPA and indictment “are not evidence of guilt and that all individuals are presumed innocent until proven guilty.”

The DPA “includes a number of remedial measures designed to help ensure that there are no future violations such as those alleged in the Affidavit,” the US attorney's office stated.

The diocese specified July 15 that among the changes it is to undertake and maintain under the DPA are the “return of donations related to alleged fraudulent activities against parishioners”, making staff changes in the accounting and chancery offices, improvements in accounting for donations and priest spending, the formation of a new review board focusing on ethical conduct, establishing a fraud prevention hotline, revising collection policies, and initiating a penal process for Fr. Vargas.

The diocese added that it had already undertaken the enumerated changes during the investigation related to Fr. Vargas, excepting the penal process, which it said “will begin now.”

The prosecutor's office also noted that the diocese “has reimbursed identified victims of the alleged fraudulent scheme.”

Bishop Joseph Kopacz of Jackson said July 15 that “there are still steps to be taken and certainly more changes ahead. As part of an agreed upon resolution of the federal investigation, the Diocese will welcome periodic review and oversight of its financial and management practices and protocols. As a result of the many steps we have already taken to tighten our internal controls, we are very comfortable with this resolution.”

He expressed “deep regret for all who have been hurt by Lenin Vargas’s actions” and added, “we still invite anyone to come forward with claims, and we will work to seek a just resolution with them.”

Fr. Vargas returned to his home country of Mexico while he was being investigated. The Jackson diocese has said he was barred from public ministry in November 2018, and by November 2019 it said he had been “stripped of his priestly facilities and authorities in the Catholic Church in Mexico were notified of his standing.”

Fr. Vargas was pastor of St. Joseph parish in Starkville, and its mission in Macon, until November 2018. The parish, as well as the chancery, were raided by federal agents that month following questions about Fr. Vargas' financial activities.

According to the indictment of the priest, he told parishioners he had cancer, when he in fact had been diagnosed with HIV around September 2014. He solicited donations, saying they were to cover cancer treatments and to help build an orphanage and chapel in his home country of Mexico. His alleged scheme to defraud continued from about January 2015 through September 2018.

The indictment says that the money collected by Fr. Vargas was sent to Mexico to enrich himself and Sergio Picon, with whom he had a close personal relationship, as well as business ventures.

In April 2015, Fr. Vargas went to the Toronto-based Southdawn Institute, which treats priests and religious with addiction or mental health problems. He told parishioners it was for cancer treatment.

In a November 2018 statement, the Jackson diocese said that Bishop Kopacz ordered an internal accounting audit of the finances at St. Joseph, and that afterward the diocese placed constraints on Fr. Vargas’ spending. The diocese added that it had demanded that Fr. Vargas stop soliciting charitable donations and that he do no more charitable fundraising without informing it.

A year later, in November 2019, the diocese said that “neither Bishop Joseph Kopacz, nor any Diocesan Official, committed, condoned or covered up fraudulent activity,” and that “no Diocese official had any knowledge that Father Vargas was asking individuals for money until … November 2018.”

It also said that the audit of St. Joseph parish was ordered in late 2017.

While facts about the priest’s health are at issue, the diocese has said the federal privacy law HIPPA “prohibits our discussion of Father Vargas’ medical condition.” The diocese provides medical insurance for its priests, and has said that decisions about the discussion of the priest’s medical condition were made “on the advice of its health insurance experts and legal counsel.”